Wanda deal makes Reliance India's largest trading partner with China

Anil Ambani’s Reliance Group is exploring a tie up with China’s largest property developer Dalian Wanda Group to develop property already owned by various divisions of Reliance in Mumbai and Hyderabad.

This is the first time a Chinese real estate company will invest in India.

[caption id=“attachment_556750” align=“alignleft” width=“380”]  While Ambani will provide the land parcels, Wanda will use its expertise in construction and development. Reuters[/caption]

While Ambani will provide the land parcels, Wanda will use its expertise in construction and development. The first real estate projects of the JV will be land parcels the Reliance Group owns in Navi Mumbai and Hyderabad.

The groups said they will first look to build integrated township projects in India involving a combined area of about 20 million square feet across two projects.

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To begin with, the Reliance-Wanda joint venture will develop 10 million sq. ft space at the 135 acre-Dhirubhai Ambani Knowledge City (DAKC) in Navi Mumbai’s Koperkhairane area, which is owned by R-Com. DAKC houses offices of the telecom services firm and some other group firms. Property prices in DAKC have doubled since since it became ioerational in 2002. D

While Reliance nor Wanda revealed the financial details of the deal, Mint quotes a senior Reliance executive as saying that the proposed development at Hyderabad and Navi Mumbai should yield around Rs 6,000-7500 crore.

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The Business Standard quotes experts as hailing the move. “India should welcome funds. China is the second-largest economy and has huge surplus to invest”, Anshuman Magazine, CMD, CB Richard Ellis, South Asia, told the news paper.

Ambani’s Reliance MediaWork will also explore possible co-operation with Wanda Group in the multiplex business in India and the United States, the companies said in a statement.

The ambitious Wanda Group became the world’s biggest movie theatre owner this year with the $2.6 billion acquisition of US multiplex operator AMC Entertainment, and plans to spend $10 billion in North America over a decade.

The deal comes at a time when the Reliance Group is laden with significant debt. Cash infusion by way of moneitising its land parcels will surely help ease the firm’s debt burden as its recent attempts to raise equity aimed at de-leveraging its balance sheet- divesting its telecom tower assets and listing its undersea cables unit in Singapore - haven’t been successful.

Reliance has previously sought cheap funding from Chinese state-backed banks. Earlier this year, Ambani’s heavily-indebted Reliance Communications repaid holders of foreign bonds by raising a loan of $1.2 billion from a clutch of Chinese state banks.

Also this year, Reliance Power secured $1.1 billion in financing from Chinese banks for a power project in central India.

Ambani said in a statement that his group has become the “single largest trading partner between India and China.”

“We are now looking forward to extend our strategic partnership to the highly successful and dynamic Wanda Group, in a manner that will tremendously benefit both groups, and unlock substantial value for millions of all our stakeholders,” Ambani added.

With inputs from Reuters